Retailers That Go Under Are More Likely To Be Gone For Good
Retailers that fall into bankruptcy wind up liquidated almost three times more often than other companies as shopping’s waning popularity and tougher competition make turnarounds harder to execute, Fitch Ratings said. That’s the conclusion of the credit-grading firm after studying 30 recent retail bankruptcies that involved $10.5 billion of debt. Fifty percent didn’t survive the process, compared with 17 percent across other industries, Fitch said in a 114-page study released Wednesday. Grocery chains were an exception, with five of six emerging as operating businesses because they had strong locations, Fitch said. Mall visits are “not as popular as something to do for a pastime, particularly among teens,” said analyst Sharon Bonelli, one of the report’s co-authors. “They’d rather be on their phones and spending their disposable income on things like their electronics or restaurants, coffee shops.” Most of the defaulters were companies that didn’t have a unique model, selling branded goods that shoppers could get elsewhere, Bonelli said. Read more at Bloomberg.
